Orange juice rises on USDA production estimate cut

General Comments: Futures closed a little higher as some delayed buying related to the USDA production data appeared. Some short covering from speculators was noted as well. USDA dropped production estimates by another 1.0 million boxes in its reports as expected by the trade. Greening disease and what it might mean to production prospects continues to be a primary support item. Weather is good for production overall, but more rain is needed. Good rains were seen in the state yesterday. Irrigation is widespread, even with some rains late last week. Temperatures are warm in the state, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year continues. The Valencia harvest is continuing. Brazil is seeing near to above normal temperatures and scattered showers.

Chart Trends: Trends in FCOJ are mixed to down with objectives. Support is at 140.00, 135.00, and 131.00 May, with resistance at 145.00, 148.00, and 152.00 May.

COTTON

General Comments: Futures were higher Friday in reaction to the USDA reports. The domestic estimates featured slightly more production, but more demand as well to keep the ending stocks estimates unchanged. World data showed increased ending stocks estimates, but only due to the Chinese government stockpiling. Ending stocks estimates for the rest of the world were actually lower, and this provided a lot of the reason to buy futures. Ideas are that Cotton prices will now hold strong for a while due to the estimates released yesterday. Some traders think that US planted area will increase from the estimates released at the end of March due to more favorable Cotton futures prices and sinking Corn and Soybeans futures prices. Weather will be watched as more wet weather in the Delta and Southeast could create less interest in Corn and more in Cotton to avoid having Corn pollinate in the hottest time of the year. Demand ideas remain strong overall based on the strong export paces seen in the USDA reports in recent weeks and on reports of tight domestic and world cash markets, but export demand is a little less lately.

Overnight News: The Delta and Southeast will see mostly dry weather early in the week and rains later in the week. Temperatures will average near to above normal in the week and near to below later in the week. Texas will get dry weather except for a few showers on Wednesday. Temperatures will average near to above normal and much below normal late4r in the week. The USDA spot price is now 80.91 ct/lb. ICE said that certified Cotton stocks are now 0.441 million bales, from 0.431 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 84.40, 84.00, and 82.60 May, with resistance of 86.50, 87.10, and 87.80 May.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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